Economic & Research Insight

Emerging Market Consumers Ready for Mobile Retail Services
By Jeff Loucks, Ph.D., IBSG Economics & Research Consumers in Emerging Countries Have Used Mobile Retail Services, Ready for More
According to a Cisco IBSG Market Watch survey conducted in thirteen countries,1 consumers in emerging markets are ready to use their mobile devices to improve their shopping experience. Global retailers looking to expand into emerging markets do not have the luxury to “wait and see” when devising a mobile strategy. Consumers in these markets, especially those who are urban dwellers and more affluent, have already used their mobile devices for advanced functions like price checks and mobile coupons, and are willing to use them for much more, including mobile payments. They will likely gravitate toward retailers that can provide a full range of mobile services, whether they are local specialists or global powerhouses. Cisco IBSG asked consumers about how they have used their mobile phones to shop (see Figure 1) and what they would do with their phones if secure services were available (see Figure 2). All respondents in the survey were both broadband and mobile subscribers. In the U.S. and Western Europe, where broadband access is common, the survey respondents were close to the average household in terms of income and technology adoption. In emerging countries, however, broadband users are much more likely to be affluent urban dwellers and early adopters of technology than the general population.2 While the survey respondents may be less representative of their home markets as a whole, they are precisely the consumers for which most global enterprises compete in these countries. In the U.S. and Western Europe, younger respondents tended to be more experienced in using, and more receptive to, mobile retail services. The survey’s key findings include the following:

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consumers are already redeeming mobile coupons when they make purchases.S. Germany. Inc. richer means of communication. mobile instant messaging.. and 14 percent of consumers under 30. Spain Source: Cisco IBSG Connected Life Market Watch. but Italian consumers were far more likely to have done so. younger consumers are more likely to have done so. Globally.3 In India and China. with India and Brazil topping 70 percent. Italy. Have you ever used your mobile phone this way when you were shopping? 80% 70% 60% 50% 40% 30% 20% 10% 0% "Always" Take Mobile Phone Shopping Call to Discuss Compare Prices Purchase Use Mobile Coupon Western Europe India China Brazil Global U.S. 10 percent of U. Base=Mobile and Broadband Subscribers W. 64 percent of consumers use their mobile devices to call family and friends about purchases. which have lower penetration rates. While most consumers are currently calling their friends and families. Cisco IBSG Economics & Research. In the U. In the U. at 15 percent. and social networking could increase in popularity as faster networks and more advanced devices become more common in emerging markets. and 9 • • • Cisco IBSG Copyright © 2009 Cisco Systems. have done so. and Western Europe. France. In Western Europe. All rights reserved. 2009 • Nearly 70 percent of consumers across various countries “always” have their mobile device with them while shopping in a store. 9 percent of consumers overall. over 20 percent of consumers have used their mobile devices to compare prices at other stores. 8 percent of consumers have compared prices. and Brazil. Page 2 .S.Economic & Research Insight Figure 1. China. such as using mobile phones to take pictures and video of prospective purchases.S. In India. Europe=Britain.

would you? (Percent saying Always or Often) 70% 60% 50% 40% 30% 20% 10% 0% Check Price Request of Product at Help In Store Another Store Check Product Reviews Receive Mobile Coupons Scanned at POS Pay with Phone at POS Brazil Western Europe India China Global U. as opposed to 10 percent of all consumers. IBSG Economics & Research. • • Cisco IBSG Copyright © 2009 Cisco Systems. Globally.S. as opposed to 4 percent of all consumers in both countries. in countries with lower overall interest. In the U.18 percent of consumers under 30 would do so. Italy.” Over 40 percent of Indian and Brazilian consumers and 36 percent of Chinese consumers would use their mobile devices to seek assistance while they are in the store. Inc. 27 percent of consumers would check product reviews with their mobile devices. we found younger consumers more receptive. 24 percent of Italian consumers would use their mobile devices to seek instore help. with 61 percent saying they would do so “always” or “often. Germany.Economic & Research Insight percent of UK consumers under 30 have used a mobile coupon. Spain Source: Cisco Connected Life Market Watch. France. Base=Mobile and Broadband Subscribers W. If you could do the following securely from your mobile phone. 2009 • Consumers in Brazil were most enthusiastic about using a service that would allow them to check the price of an item at another store. All rights reserved. Page 3 .K. and 36 percent of consumers would sign up to receive coupons that they could redeem at the point of sale (POS). Europe=Britain. Once again. Figure 2.

5 In some cases.S. and urban segment of the population. China. In addition. All rights reserved. such as commodity prices. Cisco IBSG Copyright © 2009 Cisco Systems. Market for Retail Services Could Be Deep in Emerging Countries Consumers in emerging markets show high interest in mobile retail applications. online services. their interest can be attributed to the survey sample. PC-based usage pattern. in the U. In emerging countries. who have grown up using mobile devices and are not as wedded to the PC. the perceived value of mobile services is greater in emerging countries because the Internet.6 Finally. mobile penetration is significantly higher than Internet penetration. and Europe First. and electronic commerce. over 5 million people who would otherwise be “unbanked” are using mobile banking and money transfer services from Mpesa.Economic & Research Insight • Enthusiasm for using the mobile device as a means of payment is highest in Brazil. can cross the “usefulness” hurdle. which captured a technologically advanced. the mobile device has been a vital means to connect users to time-sensitive market information.S. both in their current and potential usage. For consumers under 30.7 Emerging retailers that have pricing flexibility built into their business models could use the mobile device to push the daily “market price” of their goods and services to consumers.4 Mobile devices have been the consumer’s primary channel for data access. making the information. mobile devices provide access to services that would otherwise be impossible to deliver due to a lack of infrastructure. more valuable. with between 30 and 40 percent of consumers willing to use them to pay “always” or “often. and Western Europe. despite often having slower networks and less sophisticated devices. or in the store. especially broadband. Far from being a “nice to have” capability. affluent. “Usefulness” Adoption Threshold in U. digital music retailer iMusica takes two months to sell online what it sells in one day via mobile devices.S. In Kenya. In short. broadband Internet usage is pervasive. Inc. consumers in emerging markets have had greater exposure to mobile services than their counterparts in the U. there are far fewer barriers to adoption. is a less viable alternative. or people will not alter their traditional. and fewer consumers have felt the need to use their mobile devices for functions that they currently perform with their PCs. and the service.” In the U. mobile services are also the best way for retailers and other enterprises in emerging countries to reach their customers. younger consumers again stood out. for example. Mobile retail applications that enable consumers to access information or value added services while they are on the go. Thus. In Brazil. 27 percent of French consumers would use mobile devices to pay at the POS. In part. and Western Europe. and India. mobile services must provide a significant advantage over what is available through the Internet. Page 4 .S. and Western Europe. they must be useful. Bu there is reason to believe the desire for mobile services may extend to the average consumer. To gain traction with these consumers.S. 21 percent of U.

China. France. South Africa. For purposes of this survey. Global=combined results from all 13 countries. Unless otherwise noted. China. Brazil: Broadband Penetration: 4 percent. Italy. China accounts for 24 percent of DSL connections globally (Source: Point Topic. 2009). Inc. Italy. and tech-savvy urban dwellers. India. 9/08) 15 percent of households (Source: Frost & Sullivan. we highlight results from Brazil. ranging from in-store assistance to mobile payment. To reach these consumers. In this paper. 2. India. Cisco IBSG Copyright © 2009 Cisco Systems. especially those under 30. Spain. Mobile Penetration: 41 percent. 2008). There is also potential to reach average consumers in emerging markets with simple. Germany. and m-commerce sites with transactional capability. Mobile and broadband penetration rates for Brazil. 12/08).Economic & Research Insight Conclusion Retailers in emerging markets must roll out compelling mobile services or risk being irrelevant to a vital consumer segment: young. The survey is part of the Connected Life Market Watch series. are provided below. affluent. retailers should experiment with a variety of advanced services.S. while launching more basic mobile offerings for the mass market. the United Kingdom. China: Broadband Penetration: 6 percent (Source: Ministry of Industry and Information Technology. and the U. Spain. Western Europe (France. All rights reserved. The countries covered in the survey are as follows: Brazil. a collaboration between the IBSG Service Provider and IBSG Economics & Research teams. South Korea. and the UK). 10 percent of households (Source: IET. A significant percentage of consumers. The survey asked mobile subscribers from 13 countries a range of questions about their current and future mobile usage. Endnotes 1. such as marketing campaigns. China. Mobile Penetration: 63 percent. India. Page 5 . retailers should take a dual approach. Saudi Arabia. and South Africa. mobile coupons.S and Western Europe. SMS-based services that can be accessed with basic mobile devices. the data source is International Telecommunications Union. Retailers should selectively roll out services targeted at these consumers. 2009. Retailers in these markets will gain valuable experience with their mobile campaigns while the mass market catches up to the early adopters. are interested in services ranging from mobile price comparisons to in-store mobile payments. Mexico. In the U. calculated by percent of total population. Germany. and the United States. Despite the relatively small penetration by population.

farmers have access to an SMS-based service that provides small farmers with weekly price updates on commodities. for shopping-related activities than other Western European consumers. the 78 percent of digital music sales came from mobile phones in 2008. Click here for the ITU’s mobile penetration figures.3 percent. For example. 3. 2009). Source: IT News Africa. in Zambia. 2/09 7. In Brazil. 2009. Source: ITU. In general. including broadband. 4. Mobile Penetration: 20 percent. with 22 percent coming from the Internet (down from 24 percent in 2007. Page 6 . 6.Economic & Research Insight India: Broadband Penetration: 0. 5. Cisco IBSG Copyright © 2009 Cisco Systems. click here for Internet penetration. consumers in Italy and Spain were more likely to have used their mobile devices. and be willing to use them in the future. All rights reserved. 2 percent of households (Source: LECG. 5/09). Inc. Source: IT Digest.

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